What to do when you have more rights to your toaster than your apartment

 Old buildings in Ukraine. Crowded old housing

Following the Opal Towers incident over Christmas 2018 and the recent Mascot Towers cracking incident, the question is being asked: "Who is responsible!?".

In the case of Mascot Towers, residents are receiving interest-free loans and rent assistance, yet they are right to be suspicious of a government that provides bail-outs and emergency relief, when "the hand that giveth is also the one that taketh away" – in the form of transfer duty.  The NSW Government predicts revenue to reach $5.6bn from residential real estate transactions alone in 2018-19.

While it is comforting to know that the residents of the Mascot Towers are receiving some financial assistance, there are many other property owners in NSW who currently bear the financial burden of defective workmanship.  The Owners Corporation Network has estimated that 80% of all new residential strata constructions in NSW, Victoria and Queensland could have defects. 

So, what can you do when “you have more rights when you buy a toaster that is faulty than you do when you buy an apartment”?

Consumer Rights

When buying new units in multi-storey buildings, buyers need to understand the consumer laws that apply to defects.  The Home Building Act 1989 (NSW) (Building Act) provides a statutory warranty for general and major defects.  Generally, the warranty periods runs from the date the occupation certificate is issued.

The Building Act provides that:

(a)        A general defect is anything other than a major defect.

(b)        A major defect is major element of a building that is attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code (or any combination of these), and that causes, or is likely to cause:

  1. the inability to inhabit or use the building (or part of the building) for its intended purpose, or

  2. the destruction of the building or any part of the building, or

  3. a threat of collapse of the building or any part of the building.

(c)        A major element of a building means:

  1. an internal or external load-bearing component of a building that is essential to the stability of the building, or any part of it (including but not limited to foundations and footings, floors, walls, roofs, columns and beams), or

  2. a fire safety system, or

  3. waterproofing, or

  4. any other element that is prescribed by the regulations as a major element of a building.

A claim can only be made within 2 years in the case of general defects and in the case of major defects within 6 years. 

One problem is that when the building company that does the construction is wound up after the project is complete, the new unit owner has no one to turn to.  If the builder is still around, then the buyer or the owners’ corporation must take action within the timeframes provided.  There are little to no buyer protections outside these periods.

Fortunately, the Strata Schemes Management Act 2015 (NSW) requires an owners corporation to consider general and major defects at each Annual General Meeting, so that they can make a timely claim if necessary.  If in doubt as to whether a defect is a general or major defect, commence action within the 2-year period so as not to be barred. 

Cracking under pressure? We can help

Our property lawyers possess extensive and high-level experience in all aspects of property transactions including commercial, retail and industrial asset acquisition, disposal, leasing, development and management. Together with our dispute resolution team, our lawyers provide strategic advice in both protecting and enhancing the interests of our clients in the resolution of complex property disputes.



Deborah Kent